By Ken Brossman, District Manager – La Crosse, Marine Credit Union
It is important to establish good credit from the start so that you do not dig a hole that is difficult to get out of. There are many ways to create that kind of credit right off the bat. Here are just a few, easy tips to get you started on the right track:
- Make sure to always make your payments on time. A late payment on even a small bill can really set you back when trying to establish good credit.
- Take out installment debt instead of revolving debt when possible. Installment debt is a loan where the borrower has fixed payments for a fixed number of months. With revolving debt, a credit card for example, the balance increases as you spend and decreases as you pay it off. It rotates like a revolving door.
- Use revolving credit periodically for small purchases to keep them active. If possible, always pay them off monthly to avoid paying interest. Set a standard to only use your credit card for groceries or gas. Larger purchases can be paid by taking out a loan or through savings.
- Only borrow what you can reasonably afford to pay back. Work with your lender at your financial institution to analyze your income and other debt to identify an affordable amount.
- Use certificate of deposit or savings secured loans to help establish credit. These loans are a great way to establish good credit at a very reasonable rate.